In Albuquerque, New Mexico and throughout the USA, the Bankruptcy Median Test is the first stage in the Bankruptcy Means Test which was bought in under the Bankruptcy Abuse and Consumer Protection Act of 2005.

The 2005 act was a revision of the 1978 bankruptcy laws and the main thrust was to bear down on debtors who were seeking relief through chapter 7 bankruptcy, when in reality they were thought to have sufficient income to repay at least a portion of their debt to their creditors.

As you probably know, chapter 7 bankruptcy is the most popular form of bankruptcy in the US, accounting for over 90% of bankruptcy filings. The main attraction of chapter 7 is the debtor can get rid of most, if not all, of their debt in return for the court trustee liquidating their non-exempt assets and distributing the proceeds amongst the creditors. Any remaining debt is then discharged, and the debtor is no longer responsible for it. However, the reality is that most chapter 7 bankruptcy cases are what are called “no asset” cases. Generally speaking, the court trustee only liquidate non-exempt assets over certain value and when you combine this with the various exemptions allowed under US bankruptcy law it is rare that the debtor actually loses anything other than liability for their debts.

Albuquerque Bankruptcy Median Test

However, when filing for chapter 7 bankruptcy the bankruptcy means test is now fact of life and failure of which will result in the case being converted to a chapter 13 bankruptcy, which is a repayment plan where at least a portion of your debts are repaid over a 3 to 5 year period.

If the bankruptcy means test is a very complicated process and it is most important that you hire the services of a bankruptcy lawyer before proceeding.

The first step in the bankruptcy median test is to work out your average monthly income. This is the average monthly income for the six months prior to filing bankruptcy, and the period is measured in whole months. For example if you file bankruptcy in March you take the average of your earnings from the previous September to February.

Income is not simply the amount that you may have earned in salary or wages, but will include any form of income including tax refunds, financial gifts, support payments, retirement income and other areas that your lawyer will advise you on. The median test differs slightly from the means test in calculating your income in that you also have to include the income of your spouse, if you have one, even if they are not filing for bankruptcy. However, if you and your spouse have separated then you only need include the amount of money they contribute to your actual living costs, if any.

Bankruptcy Median Test

Your average monthly income is then compared to the median income for households the same size as yours and in the same state. Obviously these figures will vary depending on state in which you live and are based on the US Census Bureau figures which are adjusted every year to reflect changes in the cost of living.

If you’re income is less than the median income for your state you have passed the bankruptcy median test and you can file chapter 7 bankruptcy without having to take the rest of the means test.

If you’re income is more than the median income for your state you have fail the bankruptcy median test and will have to take the means test. Be aware that filing the median test by no means means that you will fail the means test.

Your median income also has a bearing if you are filing under chapter 13. Under chapter 13 bankruptcy the bankruptcy court approves a repayment plan where you repay most or all of your debt over a period of 3 to 5 years.

If your monthly income is greater than the median income of your state, then your repayment plan has to run for a full five years.

In Albuquerque, the Chapter 13 bankruptcy process is likewise known as repayment plan or debt consolidation. A person should have enough extra income to become qualified for this legal proceeding. The best thing about filing Chapter 13 is that it enables a debtor to repay the loans, usually as long as five years, and in comparison to other kinds of bankruptcy case, it’s the least costly. The total value of a persons assets that are regarded as non-exempt will become the basis of the amount that must be paid back in a specific time interval, while also assessing the level of income and the amount outstanding that are non-dis chargeable.

Past-Due Financial Loan Repayments

Filing for Chapter 13 bankruptcy is one of the few alternatives out there for an owner of a house to avoid a property foreclosure without the approval or acceptance of the creditor. The debtor may also be able to cure the overdue home finance loan. This involves a repayment suggestion in which the debtor will present information on the monthly payments and how long the debt will be repaid.

Albuquerque Chapter 13 Bankruptcy

The debtor should stick to the terms of home finance loan under Chapter 13, including timely payments of insurance policy and real estate taxes. The very usual problem that debtors bump into the repayment plan is making the regular payments. But when the borrower has fulfilled the plan, he or she would be able to get out of bankruptcy and not to mention build a positive credit rating on the home loan.

Pay Less For Unsecured Personal Debt

A debtor will not be obliged to pay off the financial obligation fully. The two different types of financial debts are secured debts and unsecured debts, and only the first one must be fully paid, along with certain tax debts and liens. For unsecured debts, on the other hand, the repayment programs may only require as big as fifty percent and as little as 1% repayments to creditors. In addition, the leveraged creditors are not permitted to add on interest in their claims. The non guaranteed financial obligations will obviously be minimized under Chapter 13 since only a part of it, without interest rates, will be required to the debtor.

Chapter 13 Bankruptcy

There are things in Chapter 13 which a person should know about before declaring bankruptcy under it. Considering that it calls for pay back scheme to be made throughout three to five years, it generally takes 4 years after the time of filing before the discharge transpires, which can be a long time of being subjected to bankruptcy. However Chapter 13 might be a great choice for individuals who are not eligible for Chapter 7, whose houses are about to be foreclosed, or loaded with the high rate of interest of credit card debt.

A final order of debt discharge will be given out by the bankruptcy court following the repayment plan has been accomplished, and, excluding for the long-term obligations, every one of the outstanding debts will be canceled. As opposed to Chapter 7 in which debtors might lose their properties, Chapter 13 bankruptcy will let persons in debt to hang on to their assets.

Bankruptcy Article Source: http://EzineArticles.com/?expert=Bob_P_Jones

Albuquerque Bankruptcy

Corporations and partnerships must have an attorney to file a bankruptcy case. Individuals, however, may represent themselves in bankruptcy court. While individuals can file a bankruptcy case without an attorney or “pro se,” it is extremely difficult to do it successfully.

It is very important that a bankruptcy case be filed and handled correctly. The rules are very technical, and a misstep may affect a debtor’s rights. For example, a debtor whose case is dismissed for failure to file a required document, such as a credit counseling certificate, may lose the right to file another case or lose protections in a later case, including the benefit of the automatic stay. Bankruptcy has long-term financial and legal consequences – hiring a competent attorney is strongly recommended.

How to File Bankruptcy

Make sure that there are no other alternatives. A bankruptcy will remain on your credit file for up to ten years. However, if you are considering filing, your credit is probably already in bad shape. Bankruptcy allows for a fresh start. Under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), individual debtors are generally required to obtain credit counseling from an approved provider within 180 days before filing a case, and to file a statement of compliance and a certificate of credit counseling furnished by the provider. Failure to do so may result in dismissal of the case.

How to File Bankruptcy

The tw0 most common bankruptcy types are the Chapter 7 and Chapter 13 and there is also the chapter 13. Chapter 7 is a straight or liquidation bankruptcy while Chapter 13 bankruptcy is a repayment plan for individuals. It is now more difficult to file a Chapter 7 bankruptcy case because of the means test. Many individuals must file a Chapter 13 bankruptct case because of the means test.

Albuquerque Bankruptcy

How to File Bankruptcy